Malaysia credit growth eases to 5.3% as business loans cool

The banking system’s liquidity coverage ratio rose to 154.8% during the month.

Malaysian banks’ credit growth slowed in December due to lower demand from businesses.

Credit to the private non-financial sector grew by 5.3% during the month, from 5.5% in November. Slower growth in business led to the decline, with a 3.7% growth in December from the 5% growth the previous month, according to data from the Bank Negara Malaysia (BNM)

Asset buffers and impaired loans metrics remained stable in December 2025, the BNM said in a report on 30 January 2026.

The banking system’s liquidity coverage ratio is at 154.8% as of December, higher than the 145.6% in November 2025.

The gross impaired loans ratio remained the same at 1.4%, whilst net impaired loans ratio declined to 0.9% from 1% the previous month.

Outstanding corporate bonds increased to 6.9% in December, from 5.5% in November.

Malaysian banks' lending growth had earlier been forecasted to soften in the final two months of 2025, according to estimates by CGS International in December 2025 (CGSI).

A separate report by S&P Global Ratings sees lower credit demand and slower loan growth over the next two years, although banks are expected to sustain good profitability. 

"We expect a dip in credit demand, resulting in slower loan growth of 4%-5% over the next two years," said S&P Global Ratings credit analyst Nikita Anand said in a report in late 2025.